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Sep
23rd

Gambling Promotion Angers Lawmakers

Internet bingo has been a big hit in the UK for almost a decade. At most internet bingo sites UK players can fund their accounts using major credit and debit cards. Many players prefer to use Ewallet services to avoid the high interest rates and fees associated with gambling transactions. Some credit card companies actively discourage players from using credit cards to gamble and a few companies ban all gambling related transactions. In the UK a recent promotion by state run Lloyds TBS has lawmakers up in arms.

The brouhaha started after Lloyds TBS sent out letters encouraging customers to use their credit cards to gamble. The letter told potential players that they would be able to use “up to 50% of this [credit] limit for cash withdrawals and cash related transactions such as gambling, the purchase of foreign currency, money orders and gaming chips.” What the letter failed to mention is that banks treat gambling transactions the same as cash advances. Even if the cardholder pays off the balance at the end of the month interest and transaction fees are assessed. As everyone knows cash advances can have some pretty hefty fees and interest rates, in some cases 18% or 20%.

One young letter recipient is working his first job and only makes £12,000 annually. Despite his low income he was given a very high credit limit. Last year a similar promotion by Barclaycard to encourage cash withdrawals garnered the attention of members of Parliament. Tory shadow chief secretary to the Treasury Philip Hammond expressed his outrage and stated “It beggars belief that a bank so heavily reliant on public funds is promoting itself as a provider of credit for gambling habits. Taxpayers who are on the hook for a bailout worth billions of pounds will be horrified.”

What has really raised the hackles of lawmakers is the fact that banks have spent a lot of time explaining why they can’t lend to consumers and businesses with good to excellent credit ratings. Liberal Democrat Vince Cable told reporters “The senior management who signed this off need to be fired. It’s quite extraordinary that a publicly owned company is effectively encouraging borrowers to gamble on their credit cards. It is exactly the type of stupid, irresponsible behaviour that has to be stopped.” Many gaming experts warn that borrowing money to gamble is never a good idea. Most say that players should use a third party payment processor to avoid high fees.